Audit faults Lakewood school board's bill payments

Nov. 20, 2012

Written by

Margaret F. Bonafide

@mfbonafide

LAKEWOOD — Auditor Dieter P. Lerch said he had never seen anything like this.

Millions paid to a special education vendor with little documentation. Shoe boxes full of papers that are supposed to represent expenditures, although little substantiation can be found.

And as a result, Catapult Learning, a vendor that billed $20.9 million to the township school district in one year for special education services, must now change its billing practices if the company wants to be paid in the future, according to an audit report presented to the Board of Education.

“These bills average over a million and a half dollars a month,” Lerch said at a recent board meeting. After reviewing all the vendors in the district, “Our biggest issues were with Catapult.”

The audit report outlined inappropriate practices accepted by district officials in the past in which the company submitted bills with little or no supporting information about whether they were “servicing Lakewood school children,” said Lerch, a certified public accountant with the firm Lerch, Vinci & Higgins of Fair Lawn.

Under Title I, a federal program that provides funds for children with special needs, Catapult provides helps educate students who are learning disabled. The company bills hourly at a self-determined rate for 2,500 to 3,000 hours a month, Lerch said. The board, which is paying the bills, should be determining the hourly rate of the service provider, he said.

“I just want to put an order of magnitude on this,” Lerch said.

For more than a decade, the school district has been in a fiscal, political, educational and cultural crisis, with a budget that costs taxpayers more than $100 million a year. In its series “Cheated,” the Asbury Park Press documented how the Lakewood school district had failed its students, including how the Board of Education’s dealings with some of its largest vendors have been marked by lax oversight.

Board Attorney Stephen J. Edelstein, who was hired in April, said he reviewed the audits from prior years.

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“That is an area that should have a bit of investigation by the board as to exactly what they paid for in those prior audits and what you paid for in those audits that were less than full. What you are hearing is not just smoke, but fire,” Edelstein said.

Lerch cited examples of Catapult’s accounting practices.

Catapult “submits an invoice, and they don’t say how many students,” he said. “The district received a bill for $112,000 for one month and there is no way to determine if they serviced 100 kids, 1,000 kids or one kid.”

Under state funding, according to the contract that was in place during the audit period that ended in June, Catapult is allowed simply to say it serviced 4,000 students with no further information about the student or the service, Lerch said.

“We found that to be inadequate as well,” he said.

Lerch said Catapult provided boxes filled with papers that were supposed to substantiate the charges to the school district.

“It was boxes of paper, but not the information that was required to satisfy” the bill, he said. “You certainly have a right to know the students who were serviced and to verify that they are in fact your students. We feel they should provide you with an electronic student or a hard copy printout of every student they bill for every month.”

Lerch said the state comptroller also should review the contract because it is above the $2 million threshold that legally triggers such a review.

The audit also found Aramark, another large vendor that does business with the school district and provides cleaning services, should have its contract reviewed by the state.

“And we are certain the comptroller would come up with the same conclusion that we came up with,” Lerch said.

A full-time employee should be hired to oversee the bills that come in from Catapult as it is such a significant amount of money, Lerch recommended. The government funding would allow for a person to be paid to oversee the bills.

The money to pay Catapult comes from two sources, federal Title I funding and state Chapter 192/193 funding, with each addressing different needs. The school district provides services for the more than 5,000 public school students and more than 23,000 private school students in Lakewood.

Yechezkel Seitler, school board vice president, said he has been sitting in long meetings all week to implement the action needed.

“I can assure you most of these recommendations have been implemented and the new contract is a complete overhaul,” he said.